Summary
Kaltura reported revenue of $41.6 million for the second quarter of 2021, up 44.7% from $28.7 million in the prior-year quarter. Year-to-date revenue reached $79.3 million, up 45.1% from $54.7 million. Annualized recurring revenue was $145.4 million, up 46% from $99.6 million a year earlier, and the net dollar retention rate rose to 121% from 105%. Management tied the acceleration to steady sales force productivity and rising retention, and said organizations increasingly depend on video for internal operations, customer engagement, and core offerings.
Gross profit rose to $26.0 million from $18.0 million, up 44.7%, and gross margin held at 62.4%, essentially flat against 62.5% a year ago. The picture below the gross line was less comfortable. Operating income swung to a loss of $5.8 million from income of $1.1 million in the prior-year quarter, and operating margin fell to negative 13.9% from 3.9%. Research and development, sales and marketing, and general and administrative spending all climbed sharply as the company added headcount and absorbed public-company costs. Net loss narrowed to $2.7 million from $11.0 million, helped by a gain from remeasuring warrants to fair value. Diluted EPS was $0.37, down from $0.56.
On the operational side, management pointed to another quarter of strong new bookings and said Media and Telecom new bookings accelerated after a flat 2020 that reflected a COVID-19 slowdown. The company rolled out new live streaming infrastructure, launched Simulive capabilities and a Zoom plugin, and added advanced breakout room and poll features for real-time conferencing. Its technology partner marketplace now includes more than 125 companies. Kaltura also plans a virtual industry event, Kaltura Virtually Live, on November 9.
Cash generation was modest. Operating cash flow was $0.9 million for the quarter. For the six months ended June 30, 2021, operating cash flow was negative $5.7 million, compared with negative $3.2 million in the prior-year period. Capital expenditures were $0.4 million in the quarter and $1.0 million year to date, up 68.9% from $0.6 million. Deferred revenue was $59.1 million at June 30, 2021, and remaining performance obligations were $156.3 million. The company expects to recognize 65% of that backlog as revenue over the next 12 months.
For the third quarter of 2021, Kaltura guides revenue of $41.5 million to $42.5 million and adjusted EBITDA of negative $6.5 million to negative $4.5 million. For the full year ending December 31, 2021, revenue is expected to be $162.5 million to $164.5 million and adjusted EBITDA negative $17.8 million to negative $14.8 million. Adjusted EBITDA was negative $1.0 million in the second quarter, against positive $3.3 million a year earlier, so the outlook points to a heavier spending period ahead.
The company lists several risks that could disrupt that plan. They include the ongoing COVID-19 pandemic and its variants, the ability to achieve and maintain profitability, quarterly fluctuations in results, reliance on third parties, retention of key personnel, and international operations. Kaltura also said it is still scaling its network infrastructure and expects additional costs in 2021 that will weigh on gross margins. The initial public offering closed on July 23, 2021, after the quarter ended, raising gross proceeds of about $155.4 million. Liquidity at June 30, 2021 included $22.4 million of borrowings outstanding under the revolving credit facility and $12.5 million of additional availability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $41.6M | — | — | — | — |
| Gross profit | $26.0M | — | — | — | — |
| Gross margin | 62.5% | — | — | — | — |
| Research & development | $11.8M | — | — | — | — |
| Sales & marketing | $10.5M | — | — | — | — |
| General & administrative | $9.4M | — | — | — | — |
| Total operating expenses | $31.8M | — | — | — | — |
| Operating income (loss) | -$5.8M | — | — | — | — |
| Operating margin | -13.9% | — | — | — | — |
| Net income (loss) | -$2.7M | — | — | — | — |
| Net margin | -6.5% | — | — | — | — |
| Diluted EPS | $0.37 | — | — | — | — |
| Net retention rate | 121.0% | — | — | — | — |
Risks
A material weakness in internal control over financial reporting tied to fair value estimates for stock-based compensation and warrant remeasurement led to a restatement of consolidated financial statements. Remediation is not complete, and failure to remediate could cause inaccurate reporting, further restatements, or loss of investor confidence.
The ongoing COVID-19 pandemic and variants could disrupt sales, customer success, and in-person contracting. The company has experienced and expects to continue to experience an increase in average length of sales cycles to onboard new customers, delays in new projects, and requests by some customers for extension of payment obligations.
The accelerated migration from company data centers to public cloud infrastructure increased cost of revenue and is expected to incur additional costs in 2021, which will negatively impact gross margins. Gross margins decreased in 2020 to 60% from 63% in 2019, and increased usage in education where agreements do not limit usage or increase pricing may continue to pressure margins.
A significant portion of revenue comes from a limited number of customers. For the six months ended June 30, 2021, Vodafone accounted for approximately 9% and Amazon approximately 10% of revenue, and top ten customers accounted for approximately 33% of revenue. The loss of or reduction in revenue from any significant customer could adversely affect results.
The company competes with Microsoft/Azure, Amazon/AWS, Twilio, Zoom, Cisco/Webex, Adobe/Connect, Intrado, Hopin, and others, many with greater financial, technical, sales, and bundling resources. Competition has intensified and is expected to continue to intensify, potentially causing price reductions, fewer customers, and loss of market share.
Kaltura Community Edition is licensed under the AGPL, allowing commercial licensees to use it internally for free or to compete by providing it to others for free. Limited ability to enforce open source license compliance could reduce demand and put pricing pressure on offerings.
COVID-19 has caused and is expected to continue causing an increase in the average length of sales cycles to onboard new customers, delays in new projects, and requests by some customers for extension of payment obligations. Travel limitations may also challenge timely customer contracting and customer success efforts.
Rapid growth has strained management, operational, financial, and other resources. Total revenue for the six months ended June 30, 2021 was $79.3 million, up from $54.7 million for the six months ended June 30, 2020, representing year-over-year growth of 45%. Failure to scale systems, processes, and controls could prevent accurate forecasting and increase costs.
Cost of revenue increased in absolute dollars from the three and six months ended June 30, 2020 to 2021. Gross margins are affected by cloud infrastructure costs, media and telecom onboarding, Virtual Events, and education usage. Additional 2021 scaling costs are expected to negatively impact gross margins.
The Credit Agreement contains financial covenants including minimum Annualized Recurring Revenue and liquidity, and restricts dividends, debt, liens, investments, and affiliate transactions. As of June 30, 2021, the company had approximately $22.4 million of borrowings outstanding under the Revolving Credit Facility and approximately $12.5 million of additional borrowings available.
Most members of management have little experience managing a publicly traded company. The transition to public company reporting and compliance may strain resources, divert management attention from revenue-generating activities, and increase legal, accounting, and insurance costs.
SaaS KPIs
All quarters →Net Dollar Retention Rate
Remaining Performance Obligations
Annualized Recurring Revenue
Summary, forecast, risks and KPIs are extracted from KALTURA INC's SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.